Slovakian railway-maker Tatravagonka picks up stake in Kolkata-based Jupiter Group

KOLKATA: Slovakian rail freight cars and bogies manufacturer Tatravagonka A.S. has entered India by picking up a 52 per cent stake in the low profile M L Lohia promoted Jupiter Group. The Slovakian major is acquiring 26 per cent stake each in Jupiter group companies -Jupiter Wagons and Jupiter Alloys & Steel India for Rs 100 crore.

It has also signed a 50:50 joint venture agreement with their Indian partner to make air braking system for Indian and international railways market.

The structured transaction, including divestment of promoter's holding and private placement of fresh equity to overseas partner, will get concluded in phases. The first round of the deal involving Tatravagonka picking up a minority 13 per cent stake each in the two Kolkata based unlisted companies closed last week.

“It was an all-cash deal and we hope to complete the next round of transaction entailing primary infusion by end-March 2016,“ Jupiter group managing director Vivek Lohia told ET. The capital will be partly used to modernize Jupiter group's Bandel facility in West Bengal and partly, to set up a 24,000 tonne per annum of railway castings foundry within the same plant premises for Tatravagonka's Russian clients.

Incidentally, this is Tatravagonka A.S. first venture into India. The Slovakian firm is one of the leading producer of rail freight cars and bogies in Europe. Formerly known as Vagonka TATRA Poprad, the company is also involved in repair and maintenance of railway vehicles and manufacture of protective equipment and clothing.

In addition, it provides metalworking, crane and excavator work, accommodation, and road freight transportation services. It also has a joint venture in the Czech Republic for manufacturing railways brake system.

On the other hand, Jupiter Wagons manufactures freight cars and passenger coaches for Indian Railways and global markets, group company Jupiter Alloys & Steel produces specialized railway-related castings, such as couplers, bogies and turnouts.

The latter is the only AAR (Association of American Railroads) approved manufacturer of railroad turnouts (frog castings) in India. Led by the Lohia family, this young upcoming group currently has a combined turnover of Rs.600 crore.

As per the agreement entered into between the two parties, the Slovakian major plans to scale up their holding to 50 per cent if business for these specialized products surges as expected over the next three years.

“The company will see another round of capital infusion amounting to Rs.300 crore. Post this, Jupiter Wagons would become a 50:50 JV between the Lohia family and the Slovakian firm," he added.

To facilitate the third round of transaction, the Lohias intend to merge Jupiter Alloys & Steel with Jupiter Wagons and streamline operations of the merged entity.

While Deloitte Touche Tohmatsu India acted as financial advisors on this deal and Shardul Amarchand Mangaldas as legal advisors to the Lohia family, Tatravagonka had retained Alpen Capital as their financial advisors and Khaitan & Co. as legal advisors.

“The agreement also envisages a foray into wagon leasing business and setting up of a Rs.150 crore greenfield JV near Delhi to manufacture modern electro pneumatic and railways brake system for freight cars, high speed trains and metros,“ added Deloitte Touche Tohmatsu India director Prasanto Sengupta.

Elaborating further on the deal, Lohia said, the deal will not only help Jupiter group enhance its existing infrastructure, it will also enable them to manufacture double stack 25-ton axle load freight cars as well as superior quality of track and wagon items for the proposed Dedicated Freight Corridor(s) in India.

“Our combined strength in freight car manufacturing, foundry and related castings will help each other, in entering new markets globally,“ he said.